June - July 2001

Port Directory

Salutes

Command of USCG Group Honolulu will change hands on July 6.

Commander Thomas Tabrah will assume command from Commander Dee Norton
who will become policy division chief of search and rescue at Coast
Guard Headquarters in Washington, DC. Norton was assigned to Group Honolulu
in 1998. Tabrah is a native of North Kohala on the Big Island of Hawaii
and has more than 25 years of service with the Coast Guard. Most recently
he was deputy director of operations at Joint Interagency Task Force
West, California. Tabrah's last assignment in Hawaii was on the USCGC
Cape Corwin in 1980 as a first class Quartermaster. He earned his commission
in 1983. Group Honolulu's area of responsibility encompasses the eight
main Hawaiian islands out to 200 nautical miles.

Robin Kragness was appointed office manager of Trilogy Excursions. Her
administrative responsibilities include interfacing with operations,
administration, accounting and group sales. She also is the contact
person for all front office activities, including reservations and travel
agent communication.

News Briefs

Derelict fishing net hotline established

State divers plan to remove an estimated 1,000 pounds of fishing net
clinging to reefs a quarter mile offshore at Lanikai. Experts estimate
that thousands of pounds of net debris have piled up along coastal areas
of the main Hawaiian Islands.

The removal will kickoff a new program to assess the extent of lost
or discarded fishing gear washing onto reefs and shores throughout the
main Hawaiian Islands. The program is funded by the National Oceanic
and Atmospheric Administration (NOAA) with a grant to the state's Coastal
Zone Management program, and coordinated by the state's Division of
Aquatic Resources and Hawaii Sea Grant.

The community is asked to report marine debris sightings on beaches,
reefs and in nearshore waters by calling the Derelict Fishing Net Hotline
at Hawai'i Sea Grant, (808) 956-2861.

UH Geography Department graduate student Scott Godwin will conduct interviews
and field surveys to determine the extent of derelict fishing gear and
associated debris items. Godwin stresses that the program is not asking
the community to retrieve any marine debris items they may spot.

"We are just performing an assessment of the net debris problem
at this time," Godwin said.

Matson to donate containers and cash for trash

A new environmental and community relations program launched by Matson
Navigation Company will allow non-profit organizations to "cash
in" on environmental cleanup projects they conduct around the state.

Matson will donate the use of container equipment on Oahu, Maui, the
Big Island and Kauai to any 501(c)(3) group that initiates a cleanup
project. The company also will pay for the trucking expenses incurred
in the delivery and pickup of the containers. In addition, Matson will
make a $1,000 cash contribution to each group after successful completion
of the project.

Voyager Submarines to auction retired viewports

Voyager Submarines reached a milestone in the year 2000, completing
10,000 dives on each of its two submarines.

The rules governing pressure vessels for human occupancy (PVHO) require
that the submarines' viewports be retired and replaced after 10,000
pressure cycles. These retired viewports — 24 passenger viewports
and one pilot's viewport for each sub — will be sold as memorabilia
beginning June 1. They first will be offered privately to industry "insiders"
then later, depending on demand, will go on the international auction
block via E-bay.

Each of the acrylic viewports is numbered by the manufacturer, and for
a small processing fee, Voyager can supply copies of all the official
documentation for each individual viewport. Starting bids for passenger
viewports will be $500; the 2 pilots viewports will start at $5,000.

Young Bros. refurbishes barge

Young Brothers' 285-foot barge Kakela returned to service in May after
a 3-month, $2.3 million refurbishment in Seattle. Extensive structural
repairs were completed, and the barge also received a new paint job,
new deckhouse, additional container capacity and upgrading of its internal
tanks.

The barge Kamaluhia is undergoing maintenance and repairs at Honolulu
Harbor beginning in May.

The company plans to drydock three to four barges each year over the
next four years as part of a comprehensive plan to improve the condition
of its fleet, according to Glenn Hong, Young Brothers president.

The interisland shipping company currently has eight barges serving
the Hawaiian Islands after expanding its fleet last November with the
acquisition of the Maukana.

HTB to convert tug

Hawaiian Tug & Barge plans to upgrade its tug Mikiala II from a
conventional tug to a tractor tug. Work is scheduled to begin in August
and be completed by December of this year. The tug will be upgraded
from 2,250 horsepower to 3,300 horsepower, and will be equipped with
new main engines and Z-drive units, a new pilothouse and high-speed
bow winch.

According to Mark Cohen, HTB vice president of maritime operations,
the conversion will enable the company to provide enhanced ship assist
services for passenger vessel arrivals at neighbor island ports. The
Mikiala II will be placed in service in Honolulu, allowing the Eleu
to be stationed at Nawiliwili Harbor on Kauai by December.

Legislature 2001

Maritime industry fares well

by Clint Taylor

The 2001 legislative session has come to a close, and initiatives supported
by Hawaii's maritime community did better than anticipated.

Kudos are due to all involved in implementing the recommendations of
the fourth annual Hawaii Maritime Conference (HMC IV) held last November.
In particular, Kraig Kennedy, chair of the Chamber Maritime Committee,
did an exemplary job in standing up for the maritime industry at the
majority of the legislative hearings. Senators Kawamoto, Inouye, and
Tam and Representatives Souki and Kanoho understood the importance of
our maritime initiatives to Hawaii and led their respective committees
in support of these initiatives. Lastly, the Administration also supported
us with certain key bills and we believe that Governor Cayetano will
sign those that have passed.

Specifically, the following is the outcome of all the initiatives that
were followed during this legislative session:

SB 752 SD1 HD1 Expanding non-maritime use of DLNR DOBOR back-up lands.
The intent of this initiative which passed is to create a public-private
partnership to support the state's small boat harbor program. The
bill allows an expansion of non-maritime use of back-up lands around
the small boat harbors to generate additional revenue streams and
support badly needed shoreside improvements of this chronically under-funded
program. Putting DOBOR on more sound financial footing was a top issue
at HMC IV and the passage of this bill will greatly help.

SB 754 HD1 Maritime land for maritime use. This specific bill passed
the Senate but was held by House Finance. The intent was to create
a new state land classification of maritime lands and to have the
Board of Land and Natural Resources consider the needs and requirements
of maritime users for such lands prior to committing them in perpetuity
for other purposes. The maritime community still is concerned about
creeping encroachment of our scarce maritime lands for non-maritime
use and will continue to push this initiative at future legislative
sessions. However, our positions on maritime land for maritime use
at piers 12 to 23 and on the Kapalama container yard expansion were
supported in other bills and resolutions.

SB 755 SD2 HD1 CD1 Capital advancement. This is the third year that
this bill made it to conference committee where it finally was agreed
upon and passed. The bill allows for private entities to "advance
capitalÓ for public maritime improvements and receive a waiver
in future fees and rents from the State to repay this financing. The
conference draft allows for a $5 million annual cap for all projects
financed in this manner. The intent is to use this tool creatively
to fund small, time-sensitive projects that cannot wait until the
next legislative session for approval. Projects such as the second
driveway access to CSX Lines container terminal, the temporary Sand
Island container yard annex, lighting at Barbers Point, passenger
terminal improvements in Kahului, Hilo and Nawiliwili, cruise ship
tender boat facilities at Lahaina, Kailua-Kona, and Kikiaola small
boat harbors, and engineering of dolphin berthing systems on the Neighbor
Islands are all examples of capital advancement candidates.

SCR 93/SR71 Supporting accelerating development of Kapalama container
terminal facility. This resolution, which passed, supports the HMC
IV recommendation to expedite the development of the Kapalama container
terminal. It also supports the 1997 Oahu Commercial Harbors 2020 Master
Plan's number one priority to ensure that there is sufficient container
yard space to support the growth rate of Hawaii's economy. DOT consultants
developed a formula based on the high correlation of growth rate in
GSP with the necessary container yard acreage to support it. In 1997,
DBEDT projected an average growth rate in GSP of 2% per year until
2020. Based on this projection Hawaii will need 100 more acres of
container yard by 2020. Even with Matson's reengineering of their
facility to increase their capacity by 30%, there still will be a
need for 70 more acres of container yard by 2020.

HB 1686 HD1 SD1 CD1 Rainbow Island Express ferry facilities special
purpose revenue bonds. The legislature passed this initiative to finance
improvements to harbor facilities for use by Rainbow Island Express
to operate both inter-island and intra-island ferry service in Hawaii.
At the HMC IV, there was a consensus recommendation to support the
demonstration and implementation of viable ferry services throughout
the state. Rainbow Island Express' willingness to accept the responsibility
of repaying up to $44.5 million in revenue bonds for improvements
to facilities for their use is a strong indication that they believe
such a service will be successful. This issuance of revenue bonds
by the State allows for considerable savings in interest cost over
private lending rates and contributes to the success of the venture.

HB 695 HD1 SD1 Kapalama relocation of Kakaako displaced lessees. This
Administration initiative died in conference committee. Its intent
was to take 12.6 acres of the Kapalama Military Reservation and use
it as a DLNR industrial park site for State lessees being displaced
by development in Kakaako. While the maritime industry sympathizes
with the need to designate state land for relocation of displaced
lessees, Kapalama is prime maritime land and the planned container
yard expansion needs to be assured of sufficient land before it is
given for other purposes. Discussions with DOT officials indicated
that it may be possible to design both a 70-acre container terminal
and a 12.6 acre industrial park on the Kapalama site. More detailed
layouts need to be explored for alternatives assuming a tunnel under
the Kalihi Channel or retention of the existing Sand Island bridge.
This initiative failed due to differing views of how best to handle
the existing short-term lessees at Kapalama that would be displaced
by those moving over from Kakaako.

SB 1028 SD2 HD2 CD1 Consolidation of Barbers Point and ATDC into HCDA.
This Administration bill did pass, however the conference draft omitted
consolidation of ATDC into HCDA which allows continued DOT Harbors
development and management of ATDC's Piers 12 to 23. The maritime
community offered amendments for consideration that would have allowed
for a partnership between DOT Harbors and HCDA for development and
management of these piers if the consolidation had occurred. DOT Harbors
would have been responsible for all maritime development; HCDA would
have been responsible for all supportive non-maritime development
of the back-up lands; and all revenues from these waterfront and backup
lands would have gone to the Harbors special fund. A similar precedent
has been established for HCDA land at Piers 1 and 2 which are in the
HCDA jurisdiction but are earmarked for maritime use with the revenue
going to the DOT Harbors Division. The industry's position on this
bill was to preserve maritime land for maritime use.

SCR 94 Supporting increasing the depth of Barbers Point Harbor. This
resolution passed, which supports increasing the depth of Hawaii's
second busiest harbor to 45 feet for safety, for extra capacity necessary
coal ships, and for military backup.
SCR 20 Requesting DOT to study the feasibility of an inter-island
ferry system. This resolution passed and followed the HMC IV consensus
recommendation to support the demonstration and implementation of
viable ferry services throughout the state.
In summary, this past legislative session was the most successful
ever for Hawaii's maritime community and is the culmination of four
years of working together in support of consensus recommendations.

However, the industry must remain vigilant to preserve any undeveloped
land around Hawaii's commercial harbors for its primary maritime use
before any ancillary or supportive uses are permitted. This is true
not only for Kapalama, but also Fort Armstrong, Piers 12 to 23, and
other lands around the state where maritime users require adjacency
to the sea.

Hawaii's maritime community will continue in its efforts to raise the
consciousness around Hawaii of the importance of our harbors for our
survival and for long-term economic growth in the state.

Clint Taylor, HMC IV coordinator and president of Taylor Consultants,
is a management consultant specializing in public affairs and business
development in maritime and non-maritime sectors.

Soundings

Why Adtech in Kakaako?

by Jan Yokota

The Hawaii Community Development Authority (HCDA) recently began a
four-month period of negotiations with the Adtech Division of Spirent
Communications for a long-term lease on State lands in Kakaako Makai.
Adtech, which was founded thirty years ago by University of Hawaii professors,
designs and assembles advanced telecommunications test systems that
are sold worldwide to companies like Cisco Systems, Lucent, AT&T,
and Sprint. Last year, Adtech's annual revenues exceeded $160 million
and its staff doubled to more than 330 employees.

We see the potential for establishing an information technology/ biotechnology
nucleus of activity in Kakaako Makai that will act as a catalyst to
diversify and strengthen our state's economy.

In addition to the proposed Adtech site, an adjacent parcel has been
set aside for the UH Medical School/Biomedical Research Center, which
received legislative funding this session. High tech companies thrive
on networking and collaboration opportunities and we believe that the
creation of a technology center in the midst of Honolulu will attract
other high tech firms and talent to the area. By locating dynamic high
technology and biotechnology anchors next to one another, we have an
unusual opportunity to create the critical mass needed to grow and sustain
these industries.

Several questions have been raised about the proposed lease to the Adtech
Division of Spirent Communications.

Why should high technology uses be located in Kakaako Makai? Numerous
economic reports have identified areas of potential economic growth
for Hawaii. High technology is one industry in which Hawaii has natural
and competitive advantages such as an extensive telecommunications infrastructure
and an enviable quality of life.

However, several problems currently limit the growth of the high technology
industry, including the absence of a critical mass of high technology
companies that can attract additional high tech firms. With a central
location, infrastructure in place or under construction, and nearby
private lands offering expansion potential, Kakaako Makai presents an
opportunity to build the needed critical mass.

Technology companies could also complement the learning centers planned
for Kakaako Makai that will focus on ocean science, astronomy, volcanology,
and biotechnology and provide hands-on learning experiences in science
and technology.

Why Adtech and not another company as a high technology anchor? Adtech
is the only technology company that has made a formal request to lease
lands in Kakaako Makai and, as a rapidly growing, internationally recognized
company with local roots, can be a strong technology anchor.

Why is Adtech interested in building a new office in Kakaako? Adtech,
which started with just a handful of people working out of a garage,
is today Hawaii's fastest growing technology company. Adtech's offices
are spread out among four buildings throughout the Kaimuki area, and
the company is quickly outgrowing its current location. The company
needs to move to a new, larger office building where it can house its
growing company under one roof in order to continue to successfully
compete in the global marketplace.

A central location, close to UH-Manoa and the downtown commercial area,
is essential, as Adtech plans to continue to work closely with the University
of Hawaii to educate students and develop new technologies. Proximity
to the planned UH School of Medicine/Biomedical Research Center offers
synergistic potential and the opportunity to build a high technology/biotechnology
nucleus that could attract other high tech firms to the area.

Does the State plan to construct a building for Adtech? No. The State's
role will be limited to leasing land to Adtech, which would finance
and build its own headquarters.

Will the Adtech site affect cargo operations at Fort Armstrong? The
proposed Adtech site is where the Foreign Trade Zone CEM warehouse is
located, Ewa of the Food Distribution Center. About five acres in size,
it includes a small portion of an area being used by the maritime industry
for chassis storage at Fort Armstrong. We have been working closely
with the users of these facilities to mitigate any impact to harbor
operations and efficiency.

Why is an initial five-year rent-free period being considered? It's
important to look at Hawaii's competitive position with respect to other
states. To attract and retain strong technology firms, many state and
local governments offer a number of attractive incentives, including
free land, tax relief, investment tax credits, and loan guarantees.

A five-year rent-free period is being considered to allow some initial
relief in construction and operating costs. As many in the real estate
industry know, the cost of constructing a new building in today's economic
environment is prohibitive, particularly in view of the current office
vacancy rate. After the initial five-year period, the ground rent would
increase to market rates for the remainder of the lease term.

Incidentally, Adtech has strong ties to the University of Hawaii and
intends to continue funding technology-related internships, scholarships,
and directed research. Space within its building could be provided for
UH-related technology training and laboratory facilities. The estimated
value of these contributions is substantial.

Can we create a technology center in Kakaako? It's a vision that's
achievable and that offers tremendous potential for our state. dtech
could be one of the catalysts to help realize that potential.

Jan Yokota is executive director of the Hawaii Community Development
Authority.

2001 Hawaii Port Directory

Aloha.

We congratulate the magazine on its continued coverage of news around
Hawaii's waterfront, and in providing useful information about Hawaii's
commercial harbors and maritime businesses in this special issue each
year.

As Hawaii's economy continues to show signs of growth, the Harbors Division
continues to move forward in addressing such issues and projects as
the shortage of pier and yard space at Honolulu Harbor, improving and
expanding passenger ship facilities statewide and the state's commercial
fishing village now under construction at piers 36-38.

Hawaii's maritime community continues to play an important role in ensuring
that we meet the needs, present and future, of those who use Hawaii's
commercial harbors.

We value your input and invite you to contact the Harbors Division for
information, assistance or just to share ideas. You will find our updated
staff listing in the Government Services section of this directory,
starting on page 13. We welcome your calls.